The motivation for shared services as a way to improve efficiency and effectiveness in global organizations is not new, but governing an expanding shared service often proves to be a difficult undertaking.
Over time, as organizations grow and expand into new businesses and geographies, shared services can increase in size and complexity to a point where a line item on an expense report becomes an annual budget similar to a small business with no inward focus on processes, governance or reporting.
It doesn’t need to be this way. Shared service arrangements can be designed appropriately to become sustainable, scaling with the organization to support growth over time.
How does this happen?
When a new shared service launches there are often few people involved so roles and governance-related policies are informal and the day-to-day administration is generally successful, because people just do whatever it takes to get the job done.
When the workload grows, particularly if it grows slowly over time, the natural focus is for the team to scale up to continue to meet operational demands, and put less emphasis on oversight and governance. This tends to work well as a few key resources / subject matter experts are able to fill in any gaps, ensuring the function continues to operate. But what results is increased risk through lack of documented processes, financial oversight, and general lack of clarity for all stakeholders.
It’s easier to end up in this situation than most people might think. It is not something that happens overnight, it creeps up slowly over time until either there’s a major issue, or the people that run it move on, taking all of the knowledge with them.
What can you do about it?
If you are in charge of a function like this there are a few structures you can put in place that will help keep you on track:
- Understand the Current State: Get an objective opinion on the health of the operations. Having another set of eyes conduct this assessment will alleviate any unintended biases.
- Clearly Define Roles: Review roles and responsibilities, address gaps and overlaps to ensure the resources are being used effectively.
- Document Processes: Develop new processes that fill the identified gaps and inefficiencies and document them for knowledge capture and training.
- Invest in Systems, Tools and Technology: Identify needs and user requirements for systems to house information and feed into reporting and other tracking processes.
- Gather and Store Knowledge: Create an inventory of intellectual property to increase transparency and ensure others can manage the operation if required.
Doing this will increase oversight and ensure key gaps are filled. But to make sure you can sustain the improvements over time, you need to take a few additional steps.
How can you make it Sustainable?
Once you establish the appropriate structure, create a governance model to guarantee the improvements will be around for the long run.
- Develop and Review Metrics: Develop key performance indicators that measure important outcomes and create a dashboard to track and report on performance.
- Enforce Governance Structures: Create policies, review cycles, and communication processes to engage key stakeholders.
- Manage the Change: Avoid falling back on your improvements; carefully monitor progress and realign when required.
For many people, these sorts of changes seem like overkill – overwhelming a simple function with unnecessary structure and oversight; but it can be as simple or complex as you need, depending on your particular situation.
During the implementation of improvements it is imperative that you have a dedicated team to manage the work and communicate with key stakeholders to keep the plan on track. Developing a culture of continuous improvement where oversight, process management and structure are recognized as important takes a long time. But with ongoing commitment you can set yourself up for success even when key resources move on.
To control the growth of your shared service function, remember to:
- Figure out what is really going on through an objective assessment.
- Understand who is doing what, and realign people and processes as appropriate.
- Develop performance reporting to track program outcomes.
- Create a governance structure to assign accountability.
- Document and store information and processes to make the change sustainable.
- Use the tools you created to monitor success and make corrections as needed.